Novartis in India patent battle

20th August 2012

Lawyers in India will make their final arguments before the country's highest court this week in an intellectual property hearing that could change the landscape for big pharmaceutical companies and drug patents.

Swiss-based Novartis is in a legal dispute with India's patent office over its cancer drug Glivec, which patent officials say is not a new compound but a modified version of an existing compound. They have refused to grant Novartis a patent in India.

The case has the potential to change the rules for the Indian healthcare sector, as well as possibly affecting its championship of cut-price generic versions of life-saving medicines.

If Novartis were to win, the decision would be a major blow to India's generic pharmaceutical market, which currently supplies affordable versions of crucial medicines to 1.2 billion people.

Poorer countries would also feel the blow, because they are also major customers for generic Indian drugs.

In March, India's patent office stripped German-based Bayer AG of its patent for the expensive cancer drug Nexavar on the grounds that its costs put it out of the reach of ordinary people.

The current hearing begins on Wednesday and will run for several weeks, with a decision to follow at least a month later in a case which as ratcheted up tensions between major drugs companies and the Indian authorities once more.

Western companies counter India's arguments by saying that the country is failing to recognise valuation innovation, and that lax protection for intellectual property could scare off potential investors from the country's fast-growing economy.

However, Indian generic drugs manufacturers and international aid groups say hundreds of millions of people in India and other low-income countries could lose their supply of cheap generic medicines if the case were to go Novartis' way.

According to Delhi-based Medicins Sans Frontieres manager Leena Menghaney, the stakes are high on both sides. MSF currently relies on Indian-made drugs at the front-line of the AIDS, malaria and tuberculosis epidemics in sub-Saharan Africa.

She said she feared that a decision to uphold Novartis' patent could mean the end of India's role as the "pharmacy of the developing world."

Novartis' Glivec can cost as much as US$70,000 annually depending on the dosage, but is available at much lower prices in low-income countries. Indian generic versions currently cost about US$2,500 annually.

The company argues that 95% of Indian patients already receive it free of charge under its donation scheme.

Generic manufacturers enjoy lower costs in poorer countries, and rarely plough back profits into expensive research and development.

Novartis would sustain relatively small financial losses in the event that the decision went against it, however, as only a small proportion of worldwide Glivec sales, worth US$4.7 billion last year, were in India.

The case will revolve around the level of innovation that went into developing the drug, and whether the innovation required makes the drug worthy of a patent.